New York, NY—Governor Andrew Cuomo yesterday presented New York’s $193 billion budget, and depending on whether the federal government comes through with a significant aid package, the state may have to resort to dramatic cuts in education, Medicaid spending and social services.

First, the Governor noted that last year the state’s focus was on fighting the COVID war. Thankfully, a vaccine is available and the state is administering it as effectively as possible. But the war is not over, and this is no time for COVID fatigue.

That’s why this year’s budget is really the economic reconciliation of the COVID crisis.

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“The budget is about reconciling the actions and the costs for the COVID battle thus far, and determining now fiscal liability and responsibility,” said Cuomo.

“We did what we had to do last year. Now, the bill for the battle has come due and the question is who is responsible for the fiscal liability and responsibility.”

That bill, about $15 billion, is the result of lost revenue and the costs the state incurred to fight COVID.

“New York cannot manage a $15 billion deficit. The largest deficit in the state’s history was $10 billion. $15 billion in this environment is just impossible for a state to manage, it’s beyond what we can do,” Cuomo said.

So, the hope is that the state will receive a sizable aid package from the federal government. Indeed, U.S. President Joe Biden, before today’s inauguration, proposed a $1.9 trillion coronavirus relief bill that includes $350 billion in direct aid to states, cities and localities.

Cuomo said that the state’s budget this year will be very much determined by how much money the state will receive from that $350 billion batch.

He laid out two scenarios, with one caveat, as he described it.

In the first scenario, the worst-case scenario, the state receives $6 billion, which is only 1.7 percent of the $350 billion package.

If that happened, then the state would have to raise revenue, cut expenses and borrow funding to close the remaining $9 billion budget gap. Leading progressives in the state Senate and Assembly have argued that the governor should increase taxes on the wealthiest of New Yorkers, particularly the state’s 130 billionaires.

But Cuomo said that still wouldn’t be enough to close the gap.

“The New York State legislature proposed an income tax increase. If you raise income taxes—the top rate is 8.8 percent—to 10.8 percent and you combine that new rate with New York City’s rate, that’s 14.7 percent, which would be the highest income tax in the nation. [You’d] raise only $1.5 billion.”

He added, with dramatic effect, “Worst-case scenario, I would consider that the 2021 version of the federal government saying drop dead to New York.”

The second scenario, the fair funding scenario, would be the disbursement of $15 billion to New York, which is 4.3 percent of the $350 billion and also less than the state’s population ratio of 5.4 percent.

If that funding came through, then, according to Cuomo, the state’s proposed $193 billon budget could fund $600 million worth of labor contracts, fund increases in education spending, as well as provide a tax credit for restaurants, who were hit particularly hard by COVID-19.

“What happened during COVID, many businesses were hurt, I believe restaurants would be at the top of the list. Even when other businesses reopened, we still restrained restaurants because of the social gathering aspect of the business, but I did that with a very heavy heart,” said Cuomo.

The governor reiterated that he is asking for fairness from Washington, and another big ask is the repeal of SALT, the State and Local Tax Deduction provision that was passed three years ago, and, as described by Cuomo, was the first double taxation in history.

“What this did was it literally taxed the amount you pay in state, local and property taxes. There was no deduction, so the federal government taxed what you paid in property taxes, anything over $10,000. It was targeted directly at New York State, they have to repeal SALT,” said Cuomo.

The one caveat that Cuomo mentioned earlier in his budget presentation is that if the new administration doesn’t provide the state with its fair share of funding, the state will pursue legal action.

“We are going to pursue litigation because I cannot in good faith represent the people of this state and know that they are being harmed and know that they are being treated unfairly and not do everything within my power to try to do what is right by New York,” said Cuomo.

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